The Government scrapped 500 and 1000 rupee notes on November 8th 2016. The aim of this move was to break the back of corruption and terrorism in India, fueled by black money, usually hidden in 500 and 1000 rupee notes.
If you want to buy a house or a property in any city in India, you have to make part of the payment in black money. Black money pushes up the prices of houses, making them unaffordable to the common man. Honest citizen’s who work very hard for a living, can never afford a home. Prices are just too high.
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After demonetization, prices of houses and properties in cities are expected to come down. Citizens have deposited their old 500 and 1000 rupee notes in banks. Banks have a lot of money to lend and are offering less interest on fixed deposits. This is helping banks to cut interest on loans, particularly home loans.
Yes, most public sector banks, some private banks and even housing finance companies, are cutting interest on home loans. If you are buying your first home, this is an excellent time to make the purchase. Property prices are coming down.
Home loan rates are the lowest in several years. You also get tax benefits on your home loan. The Prime Minister is pro-affordable housing. Expect some great tax benefits in Union Budget 2017 to promote affordable housing, where you will say, this is the best time to buy my home.
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You avail a home loan and repay the borrowed amount in EMI’s. Your EMI’s are divided into 2 parts.
EMI (Home Loan) = EMI (Principal) + EMI (Interest)
Tax benefits on home loan principal: You get a tax deduction up to INR 1.5 Lakhs a year, under Section 80C of the income tax act, on the EMI (principal) of your home loan.
Tax benefits on home loan interest: You get a tax deduction of INR 2 Lakhs a year, under Section 24 of the income tax act, on the EMI (interest) of your home loan. Your property must be self-occupied.
Before Union Budget 2017
You can avail a tax deduction of INR 2 Lakhs a year, under Section 24, on the EMI (interest) of your home loan.
SEE ALSO: PF Withdrawal Procedure - EPF Withdrawal Form, Rules, Status Online
After Union Budget 2017
The tax deduction limit for the interest paid on a home loan under Section 24, could be increased from INR 2 Lakhs to INR 5 Lakhs.
Too good to be true? After demonetization, honest citizens have stood in queues at banks and ATM’s, just to fight black money. Now it’s reward time.
Are you buying a home for the first time availing a home loan? You get a tax deduction of INR 50,000, under Section 80 EE of the income tax act, on the interest you pay for your home loan. This is over and above, the tax benefit of INR 1,50,000 under Section 80C and INR 2,00,000 under Section 24.
To get this tax benefit, this must be the first house you buy. Your home loan must be sanctioned between 1st April 2016 and 31st March 2017. The home loan availed should not exceed INR 35 Lakhs. The market value of property or apartment you purchase, should not exceed INR 50 Lakhs.
First time home buyers get a tax deduction under Section 80EE up to INR 50,000, on interest paid for home loan, only if the home loan is availed between April 2016 and 31st March 2017.
Expect an extension for first time home buyers from March 2017 to March 2018.
According to current rules, the market value of property purchased by first time home buyers, should not exceed INR 50 Lakhs.
This value could be raised above INR 50 Lakhs.
Citizens in rural areas are migrating to cities in search of better job opportunities. The need for affordable housing in cities has never been so high. With home prices falling and banks cutting home loan rates, it’s time for some tax benefits. Be Wise, Get Rich.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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